How to estimate variable expenses for deal analysis? (Orlando)

2 Replies

I am wondering if any of you would share the numbers YOU use for estimating repairs, vacancy, capex and PM? I have used the BP calculators and things I have learned in the podcasts to come up with my own deal analysis spreadsheet. This would be for an initial analysis of the property before really viewing it or gathering house specific data. 

I am thinking that these percentages may be off (hoping they are high...). Would love to hear what you use to estimate variable costs in your own deals.

Percentage of rent:

Repairs: 15%  (Targeting an area with older homes at this time)

Vacancy: 10% 

Capex: 15%

PM: 12% (I will be doing my own PM but want to build this in so I have the option in the future)

This really depends on the type of property (houses different from condos different from apartments, C neighborhoods different from A), the price point ($40k house different from $400k house), and local market type (downtown Boston different from rural Arizona). I could share what I use, but it'd be a disservice if what you're targeting is way different than what I am.

The general rule of thumb is 50% for all of that. Sometimes vacancy will be higher, sometimes maintenace will be higher. As @Justin R. pointed out, though, it really depends on your area and the type of property. If you have newer properties your maintenance and capex could be lower, at least initially. It you have longer staying tenants then your vacancies will be lower, etc. etc. Your estimates are just above that 50% mark so if you can find that deal you should be fine. Unless it is a 100 year old property where the tenants turnover every quarter of course. You get the picture.

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